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Let’s start with the basics. I always come back to the CASHFLOW Quadrant because it clearly explains so many aspects of business behavior. It makes it easier to understand why so many entrepreneurs are trapped in small thinking. It’s not their fault. They just happen to be living in the context of the E and S quadrants.

Employees (E’s) may quit their jobs and start their own small business. In other words, they migrate to the S quadrant. Nothing wrong with that, except that most of them stay there. The S, as you’ll recall,

stands for small and specialized, and that’s what these businesses are. The problem is that S can also stand for struggle, and sometimes selfish.

Many people in the S quadrant are happy there and that is fine. But many would love to migrate to the B quadrant, the realm of business, and to the I quadrant, the realm of the investor. Both of those quadrants represent freedom and infinite wealth. They are the quadrants of the rich.

It’s not that E’s and S’s aren’t smart enough to move to the B and I quadrants. Often they are too smart for their own good. It’s their small thinking that keeps them trapped in the S quadrant. And yes, I mean trapped. S’s often work harder than anyone else.

Here are few examples of their small thinking.

Example #1: Working hard, but thinking small

I have a friend who owns a small restaurant. He has been in business for years. Every morning before the sun comes up, my friend goes down to the produce markets to shop for the freshest fruits, vegetables, meats, poultry, and fish. By 9:00 a.m., he’s back in his restaurant preparing for the lunch crowd. At 10:30 a.m. his two waitresses come in and begin setting up the dining room. By 11:00 a.m. he is open for business. He is busy through lunch, personally coming out of the kitchen to greet his customers. He finally has a break around 2:00 p.m. While his dishwashers clean, he goes home to take a short nap. He returns around 5:00 p.m. to prepare for the dinner crowd. He is in bed by 11:00 p.m., ready to begin the next day. He does this six days a week.

He complains about the long hours, taxes, rising food costs, government regulations, and the struggle to find and keep good employees. He is also upset because none of his five children wants to take over the business.

He believes it is his personal touch—selecting the ingredients, greeting every customer that comes in, his white tablecloths, generous drinks, and fair prices—that keeps his customers coming back. And he may be right.

But itr="#ˀ0">But s also his small thinking that keeps him working long hours and his earnings low. What he thinks are the little things that count are really an example of thinking small.

My friend is not poor. He makes enough money. But he’s doubtful that his business will ever grow or attain much wealth. I know that it won’t unless he stops thinking small and begins thinking about the little things that count.

Example #2: Thinking small, and getting smaller

I have another friend who is a very successful real estate agent. When the real estate market crashed in 2007, so did her business. Rather than change her thinking, she chose to close her office, let most of her staff go, and work from home. She downsized, just like the economy.

“No,” I replied with a smile. “In fact, 2010 has been the best year of my life. Kim and I have purchased five large apartment houses for a total of nearly 1,400 new rental units, including a resort hotel and five golf courses for about $87 million.”

“Why didn’t you call me if you were looking for investments?” she asked in surprise. “You know I sell real estate. I’m still in business.”

“Why didn’t you call me?” I replied. “You know I invest in real estate.”

“I just assumed the real estate market was bad and no one was buying,” she grumbled back at me. “How did you get the loans? How did you find the money for the down payments?”

With that response, it was clear that we were talking across a great divide. For her, her real estate business was struggling and for me, my real estate business was booming. At the end of the evening, she made one more attempt to connect, saying, “Call me the next time you want to buy something.”

I replied, “Call me when you find something.”

So far, she has not called.

Example #3: A specialized specialist

A very smart classmate of mine went on to medical school to become a highly specialized doctor. It was a long, long process. He became a highly specialized small specialist in the S quadrant.

About three years ago, he was diagnosed with stomach cancer and had to stop practicing medicine. Immediately, his lifestyle changed and his income plummeted. The good news is that he recovered and is back to rebuilding his practice and his patient base. The problem is that he is physically weaker and unable to work the long hours he once did. Hence, his income remains low.

He wants to retire but, without seeing patients, he has no way to earn enough money to cover his everyday expenses, much less his retirement. He plans on working for the rest of his life, but does not know how much life he has left.

These three entrepreneurs a Ktrenot knowre examples of successful people trapped in the S quadrant, thinking small and failing to do the little things that count.